Intel is big loser in Microsoft/Nokia deal

It is becoming clear that Intel was completely thrown under the bus by Microsoft as the software maker rushed to get Nokia’s phone business. Intel has been floundering for years in its efforts to break into the mobile smartphone space, but without much luck and its Atom processors, while getting better have been passed over by smartphone makers in favour of Qualcomm's Snapdragon and other ARM-based chips.

Even Nvidia, which was in the same boat as Intel, is in a better position with its Tegra processors, further pushing Intel to the back of the pack. Nokia was initially Intel’s ally. It had a strategic partnership to create the Meego smartphone platform which could have replaced Symbian, but this was killed off last year after Redmond’s new partnership with Nokia. That was disloyal enough for Microsoft, which could at least claim that it was acting to kill off a potential rival operating system. However the buyout of Nokia by Microsoft is a total betrayal of the Wintel alliance.

Most of Nokia's low-cost handsets rely on integrated baseband processors from Intel, a business that will likely wind down by end of 2014. Intel will have to diversify its baseband customer base beyond Samsung, something which is going to be very tricky. Microsoft had already worried Intel with its move to adapt Windows for ARM chips and with this software out there, it does not need to team up as much with Intel.

Intel for its part has been cutting the cost of its Haswell chips to encourage take up from the cheap and cheerful tablet and notebook suppliers, with some success. However reducing margins is never going to sit that well with analysts and shareholders unless sales pick up.

All up it is starting to look like Intel could face some big problems on the back of its former allies’ actions.